MAANGA (MAANA, FAAANG) earnings are behind us
What an intense week! All the MAANG, FAANG, MAANA earnings are behind us, not to forget GDP and PCE data. I hate binary events and I have to admit that I am relieved and can finally focus on my ping-pong skills!
Markets really want that relief rally, don’t they?
There is nothing impressive about the earnings so far. It has been a mixed bag at its best. But markets really want a relief rally and it is interesting to watch the price movement so far. It does feel like a pure technical bounce as no fundamental reason supports this tiny rally. Well, I have to respect what the market is telling me and trade with the direction. If things turn ugly, I can always hedge. Hedging is a last minute reaction for me so I would rather trade in the direction of the current trend which is clearly bullish,
SPY 3Y weekly – At the 30,000-foot view, nothing has changed
Zooming out to a 3-year weekly chart, we are still languishing around June lows, and we will only know by next Friday if we have a relief rally in place. If earnings are good, that is enough reason for these markets to continue rallying going forward. I am hoping to get a 6-8 week rally, so I can make some money instead of constantly hedging my positions.
Market moving events next week
FOMC meeting and J.Pow conference are going to rule next week. A .75 basis point hike is expected, but any signs of the Fed pivoting here will be enough to add more fuel to this rally. I don’t expect any ugly surprises from the Fed. Either they do what markets are expecting or show signs of a pivot.
Earnings continue to roll in
Just because tech earnings are over, doesn’t mean that we are out of earnings season. Next week is again crammed with earnings reports. Hopefully, there will be no shortage of trade ideas either.
Macro Analysis (VIX)
VIX continues to drop which is very encouraging. However, in 2022 we have seen it so many times that VIX drops into the chop zone and goes back up. So, it remains to be seen what happens next.
- 11/4 is the last week where I took some bear put spreads as hedges. With hedge trades you are going to lose in one direction in the end. And in this case that direction is on the downside. Note that I am still bull heavy and will still end up slightly profitable for 11/4.
- 11/11, 11/18, 11/25 is leaning towards what I do best. i.e directional trading. There was no need for me to hedge these expiries yet, so I am trading with the current trend (i.e, short term bullish)
- FOMC announcement/J Pow talking!
- Although, we are not overbought yet, but all major indices are rapidly approaching overbought conditions. If this rally continues, we could still see 10-14 days of green before we get a pullback.
After sliding into the dark depths of a bear market, all the major indices have made a very impressive recovery. We are knocking at that grey zone of deep pullback for the first time after months.